Posted on Fri, Jul. 18, 2008

With consumers jittery about the failure last week of California's IndyMac Bancorp, it's a good time to review the account categories covered by the Federal Deposit Insurance Corp.

Most bank customers know their deposits are insured up to $100,000 by the FDIC, which was established in 1933 to prevent panic when banks failed.

But the FDIC rules on deposit insurance include a wide range of categories, from single accounts to various trusts and retirement accounts.

Here's a primer:

• Single accounts: Checking, savings and certificates of deposit are insured up to a total of $100,000 under the name of one person in a single bank. If a depositor has two accounts in the same bank, adding up to $120,000 for example, FDIC insurance will only cover $100,000 of those deposits. But if the depositor has two $100,000 accounts in two separate banks, $200,000 will be insured.

• Joint accounts: Each person listed in a joint account, including spouses and children, can have up to $100,000 insured in the same account.

• Retirement accounts: IRAs, Roth IRAs and self-directed 401(k)s held in banks are insured up to $250,000.

Insurance for these retirement accounts is separate from the $100,000 insurance for other bank accounts, so someone could potentially have insurance up to $350,000 that would include $100,000 for regular accounts and $250,000 for retirement accounts held in a single bank.

• Payable-on-death or in-trust-for accounts: Allow the account holder to designate several qualifying beneficiaries and each qualifying beneficiary is insured up to $100,000. For instance, parents, spouses, siblings, children, grandchildren and stepchildren, among others, are qualifying beneficiaries, but nieces, nephews and friends are not.

• Living or family trust accounts: Each qualifying beneficiary is insured up to $100,000.

• Employee benefit plan accounts: Insured up to $100,000 for each separate employee's share in the plan.

• Corporate or partnership accounts: Insured up to $100,000 and considered separate from personal accounts.

The FDIC does not insure money invested in stocks, bonds, Treasury bills, municipal bonds or other securities even if they were purchased from a bank.

These rules only cover FDIC-insured banks, which include federal or state-chartered banks.

Credit union shares are insured by the National Credit Union Share Insurance Fund, an arm of the National Credit Union Administration.

FDIC deposit insurance rules are available on the website www.fdic.gov, but depositors might also want to consult with their bank or a lawyer for more clarification and to ensure they are following the rules to qualify for the insurance.

-- JANE BUSSEY